It was his finest moment as governor. Our hope is that Democrats resist the pressure from public employee unions and shake the hand the governor has extended.

The core of Christie’s plan is a 2.5 percent cap on property tax increases. He wants a hard cap that would not allow towns and schools to exempt major cost-drivers like pension and health costs, as the existing cap does. And he would give local voters the power to override the cap in a referendum.

The big compromise yesterday came when he dropped his insistence on enshrining this policy in the state Constitution. That was a major sticking point for Democrats, who wanted to preserve the ability to adjust the cap if it wasn’t working. That’s a fair point. By forcing the governor to yield on that point, Democrats improved this package.

The fight over the next several weeks will turn on two issues.

First, Democrats will try to exempt certain costs to soften the impact of the cap. They argue that towns and schools cannot control things like health premiums, so allowances must be made. By the same logic, they would exempt more than a dozen other items, including pensions costs and reductions in state aid.

But exempting the major cost-drivers renders the cap meaningless. The whole purpose of the cap is to force towns and schools to wrestle down those costs, rather than pass them on to taxpayers.

On health care, for example, the cap will force towns and schools to provide less generous coverage, or demand larger co-pays and deductibles, just as private firms are doing. If local taxpayers don’t want to walk that path, they can vote to override the cap.

The second big fight will center on the governor’s “tool box” of reforms aimed at helping local officials control costs. The sharpest tool would cap increases in labor costs at 2.5 percent as well. That would include salaries and benefits, and apply to both towns and schools.

That’s the provision that the unions will fight to the death, in the Legislature and in the courts. But it’s time for that showdown. Labor costs constitute the bulk of local spending. Without this tool, it’s unreasonable to expect local officials to live with the cap.

The initiative now moves to Democrats. If they resist this sensible reform, they better have a good explanation for voters next year. If not, the governor may have just opened the door to a GOP takeover.